How To Pay For Malaysia’s Health Care

Social health insurance burdens the overtaxed middle class.

Our health care system is breaking down, which is perhaps why Pakatan Harapan appears to seriously consider adopting a social health insurance system, even though Barisan Nasional tried but failed to do it in the past.

Health stakeholders are generally in favour of it – pharmaceutical companies, private hospitals, pharmacists, and doctors – except for the Malaysian public, it seems.

Advocates for social health insurance argue that increasing health expenditure in the current tax-based system won’t work because only 10 per cent of workers pay income tax. Competing interests in the national budget, especially those that are considerably more “political” than health care, may not allow bigger allocations for health.

Malaysia only spends 4.5 per cent of its gross domestic product (GDP) on health – comprising 2.3 per cent and 2.2 per cent from the government and private sectors respectively – below the recommended spending of between 6 and 7 per cent for upper middle income economies.

The appeal of social health insurance – where workers and employers make monthly contributions, like EPF (Employees Provident Fund) and Socso (Social Security Organisation) payments, coupled with government subsidies to cover the poor and unemployed – lies in having a source of funds specially dedicated for health.

Many Malaysians, naturally, are not in support of it because no one wants to make yet another monthly commitment in a bad economy, especially when they (mistakenly) believe that the current system is fine, even if the public health care system will soon collapse under the weight of a fatter, ageing society.

Some analysts have called for baby steps like increasing the RM1 outpatient and RM5 specialist fees at Ministry of Health (MOH) facilities, amounts that were set 37 years ago in 1982. Patient charges only earned MOH RM700 million, just 2.4 per cent of its RM29 billion budget.

RM1 can’t even buy you a tiny pack of nasi lemak these days. Surely it is not unreasonable, even for the poor, to pay RM10 for outpatient services at public clinics or hospitals, or RM50 to see a specialist, inclusive of medicine even. If people can buy an illegal cigarette pack for RM5, they can surely pay double to see a doctor.

Diverting revenue from taxes on tobacco and alcohol products to health care, which would amount to about RM300 million a year if 5 per cent of sin taxes is earmarked, is another reasonable source of funding for non-communicable diseases. People should help pay for their own treatment if they fall sick because of products they consume.

In the case of smoking though, making smokers fund their own treatment in public facilities would require diverting 75 per cent of the estimated RM4 billion yearly revenue from excise duties on cigarettes and tobacco products, since the government reportedly spends about RM3 billion annually on smoking-related diseases.

But all of these are just stopgap measures. I am not in favour of social health insurance because it is yet another burden on the overtaxed middle class.

I’m also not convinced that turning Malaysia’s dual health care system into a single-payer state-run system will necessarily lead to better health outcomes.

Our private general practitioner (GP) system, for example, works fine. I only need to wait for 10 or 15 minutes to see my doctor. My GP clinic fees are affordable too, though this is probably because the poor GPs have been stuck with consultation fees of RM10 to RM35 for 27 years.  

The UK’s NHS, which seems to be what Malaysia is angling for, is funded mostly by general taxation (80 per cent) and national insurance contributions (slightly under 20 per cent). Patient charges generate a little cash — £1.6 billion (RM8.4 billion) was collected in 2016/17.

NHS’ budget reached over £140 billion (RM734 billion) in 2017. Currently, 30 per cent of the UK’s public services budget goes to health. Malaysia can’t even compare dollar to dollar, as we allocated only RM29 billion on health in our RM314.5 billion federal budget for 2019.   

UK citizens pay 12 per cent of their weekly earnings, when they make between £157 (RM823) and £866 (RM4,539), plus two per cent of weekly earnings above £866, for national insurance, which is used not just to help fund the NHS, but also state pension, unemployment benefits and sickness, disability allowances, maternity allowance, and bereavement support.

Critics of socialised medicine tell Americans pushing for single-payer health care about the chronic failures of the UK system, pointing out that the NHS canceled 50,000 non-emergency surgeries to divert resources to flu patients during flu season last winter.

The NHS missed its A&E target of treating 95 per cent of patients in the emergency department within four hours, seeing only 87.6 per cent of patients within that timeframe last November. The NHS is also reportedly short of about 100,000 doctors, nurses, and other personnel, besides lacking beds to the extent that 12,000 A&E patients waited at least 30 minutes in ambulances during the first week of the year.

BBC itself reported that the NHS is “creaking at the seams”, despite the UK spending increasingly more on health over the years. The UK is also facing an ageing society, obesity, increasingly expensive new drugs, and higher A&E visits, even as senior citizens lack state-funded social care – similar problems to ours.

Pricing health care at close to zero, or RM1, means that people can demand for as much care as they want, despite limited supply from the government, even if they don’t necessarily need it.

My partner told me about how he saw one month’s worth of insulin piling up at his relative’s house, who was obviously taking it on and off. Meanwhile, Americans with Type 1 diabetes caravan across the border to Canada to buy insulin that can cost hundreds of dollars per vial in the US, but are 10 times cheaper in Canada.

Conversely, there may be high genuine demand for care, but an artificial market controlled by the government is limited by budget constraints arbitrarily decided by shifting policy priorities.

Malaysia can continue with its dual health care system, but it should boost competition in the private sector to drive prices down, starting with requiring private hospitals to publish a price list of standard procedures and medicines.

Admittedly, it may be difficult to use market forces to lower prices in private hospitals, since the use of insurance distances individual payers from the direct impact of expensive care. But mandating public disclosure may be enough to shame private hospitals into lowering their prices.

For major hospitals such as Prince Court Medical Centre, Pantai, Gleneagles, KPJ, and Subang Jaya Medical Centre (SJMC) that are owned by government-linked corporations (GLCs) like Khazanah, Johor Corporation, and Sime Darby (parent company PNB), the Health Ministry should work with the Prime Minister’s Department and the Economic Affairs Ministry to intervene and reduce prices.

Active government intervention is fine in this case because a GLC makes huge profits from suckling on the taxpayers’ teat until they have sore, chapped nipples, to quote Ron Swanson from Parks And Rec.

GLCs IHH Healthcare (which operates Pantai and Gleneagles hospitals) and Sime Darby (which runs SJMC, Ara Damansara Medical Centre, and ParkCity Medical Centre) are among the 30 biggest public listed companies in Malaysia.

Besides intervening in these large GLC hospitals, the government should also make it easier for new players to enter the market and set up private hospitals. The increased supply and competition will hopefully reduce the cost of private health care.

When we have a robust, transparent, and affordable private health care market, then demand on the public health care system should ease.

Malaysia can still raise the ridiculously low patient fees at public facilities and divert revenue from sin taxes to health care to help boost the government health budget.

If push comes to shove, the government can introduce a wealth tax on Malaysia’s richest people and divert the revenue to health care.

Democratic presidential candidate Elizabeth Warren’s proposal for a wealth tax in the US suggests taxing a family’s wealth (net worth, not income) above US$50 million (RM209 million) at 2 per cent annually, with an extra surcharge of 1 per cent on wealth exceeding US$1 billion (RM4.17 billion).

We can do something similar, but only if necessary. The middle class, however, must not be taxed more.

There is no need to introduce social health insurance or move to a single-payer system. I do not trust the government (from whichever political party) to run Malaysia’s entire health care system.

MOH is still not transparent about the quality of care at its facilities and continues to play conflicting roles of payer, provider, and regulator, despite the change in government.

Until we have actual reforms, I hesitate at giving the State more power over something as important as health.

Boo Su-Lyn is a libertarian writer who believes in minimal state intervention in the economy and socio-political issues. Read her at Share your ideas with her at, tweet her @boosulyn, see bits of her personal life on IG @boosulyn, and watch her at

This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.

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